The Governing Council of the ECB today conducted its regular examination of recent monetary and economic developments and their implications for the risks to future price stability in the euro area. Subsequently, it decided to keep the interest rates on the Eurosystem 's monetary policy instruments unchanged. Thus, the minimum bid rate in the main refinancing operations of the Eurosystem was left at 4.50%, and the interest rates on the marginal lending facility and the deposit facility were kept at 5.50% and 3.50%, respectively.
Allow me to give you an overview of the main elements of our assessment of the latest information on monetary, financial market and other economic developments.
As regards the developments in the context of the first pillar of the monetary policy strategy of the ECB, no new monetary data have become available since our decision taken on 31 August 2000 to raise the main ECB interest rates. After having increased at a very strong pace in the first quarter of 2000, M3 growth has been showing some signs of moderation over recent months. This moderation has mainly been a consequence of lower growth in the most liquid components of M3, which bear little or no remuneration, indicating that the monetary policy measures taken since November 1999 are gradually feeding their way through. At the same time, the average of annual M3 growth rates for the period from May to July 2000, at 5.5%, continued to deviate on the upside from the reference value of 4 1/2%. The pronounced expansion of credit to the private sector up to July also suggested that households and firms continued to regard financing conditions in the euro area as favourable. In the context of the robust expansion of economic activity, continued ample liquidity conditions would constitute a risk to price stability.
Turning to the second pillar, real GDP growth in the euro area, according to first estimates published by Eurostat today, reached 3 3/4% -LRB- on an annualised basis -RRB- in the first half of 2000. Currently available forecasts predict that growth will remain above 3% next year. The strength of the euro area 's economic expansion in the past few months is in line with these forecasts. In fact, recent indicators suggest that, following the period of acceleration, the economic expansion may now have settled at a high rate of growth. The overall level of confidence has remained at, or close to, record highs in recent months. Moreover, employment continued to grow strongly in the first half of this year and the rate of capacity utilisation has risen further. Taken together, these factors should underpin the growth of private consumption and investment, and thus that of domestic demand.
The positive outlook for the euro area is also supported by external developments. The outlook for growth of the world economy, and thus for growth of euro area exports, has remained favourable. Forecasts of world growth have consistently been revised upwards over the past few months.
Expectations of a period of sustained economic growth in the euro area can also be found in euro area bond markets. Overall, longer-term bond yields in the euro area have shown a very high level of stability in the course of this year, with fluctuations being contained within a relatively narrow range.
The annual rate of increase in the Harmonised Index of Consumer Prices -LRB- HICP -RRB- was 2.4% in July 2000. Recent consumer price developments in the euro area have been very much influenced by the strong rise in oil prices and the depreciation of the exchange rate of the euro.
While monetary policy can not address short-term developments in prices, it is imperative for monetary policy that medium-term upward pressure on prices be contained. The risk that the current pressure on the HICP might spill over onto costs and prices determined in the domestic economy must be taken seriously. This holds true in particular in the context of the favourable prospects for economic growth.
The Governing Council reacted to this picture by raising the main ECB interest rates at its meeting on 31 August 2000. This step followed a series of interest rate increases implemented since November 1999. The Governing Council will continue to remain alert to emerging risks to price stability.
It is a matter of fact that recent oil price increases have caused the terms of trade of the euro area to deteriorate, and thus have also reduced real income. This loss of real income can not be avoided for the economy as a whole. Attempts to shift the burden of this loss within the economy will risk endangering the continuation of a non-inflationary growth process.
For the maintenance of price stability, it will be particularly important, in the current phase of strengthening economic growth, that wages continue, on average, to grow at rates compatible with the objective of price stability. Any attempt for wages to catch up in reaction to recent oil price increases would be highly detrimental to the current favourable growth prospects, since monetary policy would need to react to the resulting upward pressure on prices.
Governments also have to play a role in order not to convey the false impression that the costs stemming from the increase in oil prices could be avoided by relaxing budgetary policies. This would not be in line with the needs of establishing budget positions in balance or in surplus and would complicate the fostering of tax reforms conducive to a stronger growth potential of the euro area.
I should also like to reiterate that the prospects for a stronger potential for growth in the euro area will depend very much on progress made in enhancing the flexibility of labour and goods markets in the euro area. Although reform efforts in several countries have been heading in the right direction, there is still much to be done when looking at the area as a whole.
Finally, let me also say a few words about recent exchange rate developments. I noted earlier that, from a monetary policy point of view, these developments are a cause for concern as they add to the upward pressure on consumer prices in the euro area.
These concerns are compounded by the fact that the exchange rate of the euro does not appear appropriate when looking at economic fundamentals. As you are aware, we have been expressing this concern for some time. In the meantime, we have witnessed a considerable improvement in the economic growth prospects for the euro area. At the same time, owing to measures taken by the Governing Council, the outlook for price stability in the medium term in the euro area has remained intact. At present, inflation in the euro area is among the lowest in the world. The fact that the euro has continued to depreciate over recent months is not in line with these strong economic fundamentals in the euro area. Recent global exchange rate developments are also not in line with international balance of payments positions. Our concerns on this issue remain serious and we shall monitor developments closely.
Let me now give the floor to the Vice-President to say a few words about other issues discussed by the Governing Council.
First, I should like to inform you that the Governing Council has agreed on a TARGET reimbursement scheme for the benefit of TARGET participants in the event of malfunctioning in TARGET. The scheme will apply whenever the same-day processing of payment orders within TARGET can not be completed. The reimbursement scheme is intended to compensate participants for certain higher costs they incur in having recourse to the standing facilities of the Eurosystem as a result of a malfunctioning. In order to ensure a level playing-field, the scheme also applies to participants in euro real-time gross settlement -LRB- RTGS -RRB- systems of non-participating national central banks. The legal framework for this reimbursement scheme is reflected in an amended" TARGET Guideline '' which, in line with the ECB 's policy of enhanced transparency, will be published in the Official Journal of the European Communities and made available on the ECB 's website shortly.
Second, the Governing Council addressed issues relating to cross-border retail payment services, which are of particular interest for euro area consumers. You may recall that the ECB published a report on this subject a year ago, calling on the banking industry to improve the unsatisfactory service level for cross-border credit transfers before January 2002. Today, on the basis of a Progress Report, we have reviewed the advances of the banking industry against the objectives set by the Eurosystem and we have identified the outstanding issues that need quickly to be addressed. A press release on this topic will be issued later on today. The Progress Report will be available on the ECB 's website shortly.
Question: Two questions for President Duisenberg. The first question concerns your absence, which has been sharply criticised by the ministers of finance at the Versailles meeting. I would like to know why you did not feel it necessary to cancel your visit to Canada and why, on Tuesday, before the European Parliament, you said to the Monetary Affairs Committee of the European Parliament that you had been told of the date of the Informal Meeting only two months ago. Now, according to the French Presidency, the information concerning that date was given to you at the end of last year. This is usually the case, because the whole schedule for the Presidency is known six months before the Presidency starts. This means that you should have known about this date eight months ago. So why did you say this to the European Parliament? Then the second question, concerning budgets. You are asking governments, as I understand it, not to relax fiscal discipline and I would like, therefore, to know what you think about the tax cuts which the French Government has decided to make and which tend to promote demand rather than supply. Thank you.
Duisenberg: Thank you. I was not aware that the Presidency had already informed me of this late last year, as you say. My recollection is that I learned in July about the forthcoming ECOFIN meeting. I had a meeting which was already agreed a year ago in Canada for a full-day discussion, where I was to be the only speaker, with around 150 representatives from the banking community, the former ministers of finance and ambassadors from both the United States and Canada. That meeting had been widely publicised and it is true to say that my name appearing on the invitation as the discussant had, indeed, attracted quite a number of, may I say, important representatives from the financial and political community in North America. And I felt that I could not breach that commitment, of which I informed the Presidency immediately after I became aware of the forthcoming ECOFIN meeting. Now, it would have been, I believe, the 50th ECOFIN meeting I had attended. It is the first time that the absence of a central bank governor or of a minister from such a meeting caused more than a ripple in the water. But, apparently, that happened. As far as the tax cuts by the French Government are concerned, I should like to refer to the statement I just made, in which I said that the increase in oil prices does, whether we like it or not, place a burden - it has a" terms of trade effect '' in technical jargon - on the economy as a whole. Attempts to shift that burden inside the economy from one side to the other do not change anything. In technical jargon it is a negative terms of trade effect. And so my judgement on specific measures in specific countries must always be seen in the light of that statement, that general statement. And I am not in the habit of commenting on measures taken in individual countries of the euro area. But the message from my statement ought to be clear.
Question: My question is about the announcement on the foreign exchange markets which the ECB made this morning. Obviously, anything that the ECB does concerning foreign exchange markets at this time is going to attract a lot of attention. And I think that the basic consensus of opinion out there is that what the ECB did was something like an intervention, but with another name. My question to you is: was there any motivation whatsoever to do this today to boost the euro?
Duisenberg: The decision to sell the accumulated interest receipts over the past year and a half was already taken - as we have indicated in our statement - a few weeks ago. The decision on when to do so depended very much on market conditions and on technical and tactical considerations. Now, whether you call this intervention or not, intervening in the market was not the motive which led to this decision. But, I can not deny that the price that we will make today is, in our view, not unattractive. And, therefore, the decision was explained very clearly, I think. The sum of around EUR 2.5 billion will be sold in a relatively short time. And, this exercise will be repeated rather more frequently in the future before any such large accumulation piles up. So we will repeat this exercise as, by the way, most central banks do all the time. We will repeat it at regular intervals, which leaves us some leeway - also, again, for tactical market considerations - to determine the precise moment.
Question: Would you say that you are entirely disappointed by the market reaction?
Duisenberg: I was not disappointed by the market reaction.
Question: But if I said that this is a purely technical move, which the market basically misinterpreted, anybody out there who thinks that this was in any way meant to help the euro would be making a completely false interpretation?
Duisenberg: I can say that it was not meantto damage the euro.
Question: Over the past few years there has been a great deal of talk about market sentiment. In your view, how great is the level of market sentiment at the moment and how significant is the psychological factor?
Duisenberg: Now, I am not in a position to quantify a psychological factor. I am not a psychiatrist. It is of course true that these factors, namely the - to my mind unduly great - attention that the exchange rate attracts in the market, in the media and among the public do play a role. People are more or less ignoring, as I said in my statement, the underlying strong fundamentals of the euro area economy. However, we are convinced that there will come a moment when these underlying fundamental factors will prevail in the markets ' judgement about what the exchange rate should be. I can not forecast when that will happen, but I am psychologically convinced that it will happen.
Question: Mr. Duisenberg, in the recent opinion polls in Denmark there was a clear majority in favour of a" no '' vote in the referendum, and the reason why there has been a fairly substantial increase in" no '' votes in the opinion polls lies in the fall of the euro rates. Last night the Governor of the Central Bank, Nyboe Andersen said that there is an image problem in relation to the euro, which, among other things, is due to the fall in the euro rates. What are your comments on that? Could you do something to change this development?
Duisenberg: Well, if there is the perception in Denmark that there is an image problem for the euro and that this could have an impact on Danish opinion and on the ultimate outcome of the referendum, I would be happy to try to convince the Danish people that the outlook for the euro area is a very positive one. The outlook for income and output, and thus welfare developments, is very positive indeed and I would hope that if I had the opportunity to do so I would be able to convince the Danish public that for that reason alone it would be worth joining.
Question: Mr. Duisenberg, when you say that oil price rises mean that money is flowing into the oil exporting countries and you tell governments here not to do anything about this, does this mean that greater emphasis should be placed upon the first pillar of your monetary policy strategy and that you should therefore focus more on monetary aggregates?
Duisenberg: I have been misinterpreted if you have interpreted me in that way. The simple statement is that the oil price increase has a so-called terms of trade effect. It means a loss in real income for the economy as a whole. Now I was not directing myself to governments only when I said that any attempts to shift the burden of this loss in income from one sector to the other would be futile, they would not prevent the loss from being incurred. So, whether governments or employers, employees or social partners are concerned, we should all be very much aware that we can not prevent this loss in income from actually materialising. Any attempts to try to shift the burden of the loss from one sector to another should also be judged in the light of the necessary and clearly desirable continuation of strong non-inflationary growth in the euro area and in all the individual countries. It is against this yardstick that both you and I should judge those attempts, be they by governments or social partners, or by particular interest groups, be they by truckers, by pilots or whomever.
Question: I wonder, does your announcement that you are going to sell the interest income on your foreign currency in any way mean that you are not likely to sell any more of your foreign currency? And a related question, is there any implication for the currency reserves of the national central banks, which are much higher? Everybody is wondering much more about what is going to happen to these, i.e. whether the national central banks are also likely to cash in at the very attractive price which you mentioned. Is there any co-ordination on this matter in the Council?
Duisenberg: Last question first: of course there is co-ordination. Second question in the middle: you have to be aware that many central banks - may I say, in this particular case, including the Deutsche Bundesbank - are in the habit of regularly selling, and have already sold, their net accruals of foreign reserves stemming from their investments in US dollars or yen. This is common practice, almost daily practice. It is the first time for the ECB, but it is certainly not the first time for a central bank. In effect, I have had many questions from you touching upon rumours in the market to the effect that there have been interventions. Is it true or not? I have always said: no. However, commercial transactions have, of course, been conducted by central banks on a continuous basis, and they are among those transactions conducted in the past. Now the first question, the most important one: does this decision signal that you are not going to sell any more or any less in the future? This decision has to be judged entirely in its own right and it says nothing about any future sales or purchases of foreign currency. As I have always said, because it is the main thrust of your question: when there are interventions in the market, I will tell you, not ex ante, but ex post.
Question: Mr. Duisenberg, do you consider inflation to have peaked in July and, if so, can you explain the reasons for this in more detail?
Duisenberg: The inflation figure for July, 2.4%, was clearly influenced by developments in oil prices and import prices in general, including the depreciation of the euro exchange rate. Our expectation - based on an analysis of what we are seeing around us - is that it may indeed have proven to be the peak, but we can never be sure. However, next Monday you will have another price index figure and our expectation is that you may indeed have seen the peak.
Question: Are you disappointed that there is no common position among the member countries of the euro area on lowering the taxes on oil products? Yesterday, the decision by the French Government to lower some taxes on oil products was criticised by government representatives in the German Parliament. Two weeks ago, Mr. Eichel said that the Italian Government had made a mistake in lowering taxes on oil products. Is that not a rather callous position on these issues?
Duisenberg: Well, as I said, I am not in the habit of commenting on developments either in the tax field or in other fields of economic policy in individual countries. Let me say this: if these tax measures had become a euro area-wide trend, then I would have been disappointed.
Question: Could you comment on your assessment of the monetary conditions in the euro area following your 31 August decision to raise interest rates? And describe for us, perhaps, whether you feel that they are still accommodative. And could you describe for us your policy stance, for instance. Is it still biased towards tightening?
Duisenberg: I believe I have already made those comments in my introductory statement and I have nothing to add to it.
Question: You keep describing the European economy as strong and express satisfaction with growth stabilising at above 3%. But in the United States, growth is stabilising at above 4%. So I would like to ask you two questions related to that. First of all: is this not really the fundamental explanation of the so-called mystery of the weakness of the euro? And, secondly, why are you so sure that 3% is actually as good as can be achieved by the euro area, even under the present structural conditions? A few years ago, in the United States, the Fed used to believe as you do, that the sustainable growth rate was below 3%. But they were not sure. So Alan Greenspan launched what he himself admitted was a growth experiment. He kept monetary policy loose and accommodative until he could see clear evidence of inflation actually accelerating. Why do you not perform a similar growth experiment in Europe?
Duisenberg: That answers the question I just dodged by referring to my introductory statement and it answers this. We are of the opinion that liquidity conditions, as I have said, are still ample. And that is not by way of an experiment. Now I take issue with the statement that the US economy seems to be stabilising at a rate of 4%. We do not know that. And Mr. Greenspan does not know that either. We do think that in the course of the coming two years the growth performance of the euro area will not stay below, and may even go beyond, the growth performance of the United States, remarkably and admirably high as it is. But we think that we will be able to match that performance in Europe in the coming years. And that is one of the main reasons which, in my mind, underpins our assessment that the strengthening of the euro will come. For I happen to agree with you that the growth differential, which we have observed over the past number of years, is one of the main explanatory items or causes for the depreciation of the euro vis-à-vis the US dollar. As to whether it is the full explanation, as you seem to be implying, there I have my doubts.
Question: I have two questions. I would be very grateful if you could answer them plainly just to get away from the economic jargon, which quite frankly is confusing me a little bit today. They are both about oil prices. The first question. You have talked about reduced real income and a loss of real income. Does that mean that, in your opinion, the high oil prices are going to be felt in the economy of the euro area in the form of a slowdown of some sort? The second question is along the same lines, I am just trying to find a language which is a bit more comprehensible to me today: are you saying that you are opposed to governments buckling under popular pressure to lower oil tax and fuel taxes?
Duisenberg: If oil prices were to remain at the high levels where they have landed, so to speak, then it would have the effect of, as I said, a loss of income, a loss of real growth. But that has to be compared against the growth that would otherwise have to take place. So, we do not yet know precisely. There are already estimates around from various institutions and organisations of what the real impact of the persistently high level of oil prices will be. Those estimates vary from 0 to 1 percentage point. We have not yet reached the stage, I must confess, where we feel in a position to be able to quantify precisely what this is. And if we had reached that stage I am not sure whether I would tell you. But that it has a negative impact on the growth figure as such if the prices were to stay there, that is undeniable. That is certain. The second question was on the tax measures again. No, I am not going to go into the precise measures that governments should take in whatever tax field or expenditure field. I am just urging governments to stick to the goals of - over the medium term - getting their houses in order, bringing their budget into balance or with a small surplus, and continuing the efforts of - also through tax measures - making markets more flexible and changing the structure of the tax system so that it helps to fight unemployment. All measures should always be seen in that light.
Question: Mr. Duisenberg, it is more than half a century since Montgomery started liberating the Netherlands. He said" no guts, no glory '' when starting operation" market garden ''. Do you feel that if the markets hold this view it will take a long time to intervene in the market? If they think you have no guts, do you not think that this will pose a real threat to price stability, given the magnitude of the task conferred upon you by the Maastricht Treaty of keeping inflation at a level of 2%? Thus, are interventions at this time not really necessary?
Duisenberg: Well, I can assure you that I have given you my opinion about interventions and I will tell you about them once they have occurred, but not before that. However, I can assure you that neither I nor my colleagues have any need for guts. That, at least, is our gut feeling.
Question: President Duisenberg, how much money, how many hundreds of millions of euro and US dollars are transacted on the currency markets every day? Have you any idea of that? That leads me to my next question: you said that there is something by which one ought to explain the weakness of the euro, I mean there has been growth in Europe - even the Americans have noticed that - interest rates have gone up, the differential has come down, so what is the problem with the euro? Is it that the Anglo-Saxon financial markets are really against this new currency and are speculating against it because they are saying that political integration is not good enough and that there is going to be further enlargement? And if you do not want to say what you think about this, then clearly there is something wrong, because there are some things you have been saying that you can not explain and you have been saying so for the past year, so what is going on?
Duisenberg: The daily turnover in the foreign exchange market, Christian, is it a trillion?
Noyer: Something of the sort, but I do not think it has any relevance to the issues we discussed today. With a view to the size of the market, there are a number of transactions that are nationally balanced, so making a comparison between any such decision by one actor to do one thing and the global amount of the market does not make any sense. I do not think you can infer any conclusion from that. The majority of operations are by nature balanced, so I do not think that this can lead you to a proper conclusion.
Duisenberg: Second part of your question then. When I answered Anatole Kaletsky and said that I agreed with him that the growth differential between the two major economic areas in the world was a large part of the explanation for the exchange rate developments, I said a large part, i.e. there is more which I can not fully explain. And there are many factors, like the ones you quoted, which also have an impact. With the benefit of hindsight we can sometimes identify those factors. However, then there is also the phenomenon that markets have a tendency to overshoot in one direction or another. It is a temporary phenomenon. It does not mean that markets are not right. Markets are, of course, always right, but overshooting means that at some point there will be a reversal. And it is that point which I am so anxiously awaiting.
Question: I have a question for Vice-President Noyer first and then a short one for President Duisenberg. Vice-President Noyer: at the Versailles meeting of finance ministers, did you discuss the action that was taken today, or announced today, by the ECB about the intervention which is not really an intervention? In other words, were the finance ministers part of this decision, or was it a purely internal ECB decision? And for President Duisenberg: what was your reaction last week when you heard Chancellor Schröder 's assessment of the euro being good for German exports, particularly east German exports?
Noyer: The answer to the first question is" no ''.
Duisenberg: And the answer to the second question is" no reaction ''.
Question: We talked earlier about the forthcoming Danish referendum on the euro and I wanted to ask you what you thought would be the impact on the euro and the prospects for new countries joining the euro if the Danes were to vote" no '' in their referendum?
Duisenberg: Again, I can not judge the psychological impact. The economic impact upon the euro would, given the size of the Danish economy in relation to the euro area economy, be negligible for the euro area. For Denmark it is a different matter. Denmark would, with such a decision, give up all the potential benefits of membership of Monetary Union.
Question: President Duisenberg, how do you assess suggestions from the German banking industry such as, for instance, the suggestion that the European Central Bank should not intervene, but should announce very clearly that it intends to sell large quantities of currency reserves and obtain benefits for the national treasuries and, therefore, continue with debt reduction?
Duisenberg: The reserves of both the ECB and the NCBs are entirely and exclusively in the hands of the national central banks themselves and I am inclined to ignore advice such as that which seems to be coming from the German banking community.
Question: Mr. Duisenberg, you said that second-round effects must be avoided. And in Brussels you said that the actual level, I quote," of the stock of M3 is much higher than the level implied by the reference value ''. Does this mean that liquidity to accommodate second-round effects is already in the market and that all the ECB can do is try moral persuasion? That was the first question. Second question: Mr. Noyer, you said that the finance ministers were not informed. When you decided to sell the" interests '', did the imminent pressure in favour of interventions on the political side play any role in your considerations? When you answer this question - and I see you are smiling - may I remind you that you promised to give honest answers. And the third question is: can the ECB decide upon bilateral interventions by itself? I mean, interventions make sense if they are made bilaterally - you said so yourself. Are you entitled to do so if you want to?
Duisenberg: The answer to the last question is" yes ''. As long as there are no so-called" general orientations '' being issued by the Council of Ministers, which is possible according to the Treaty, albeit that the Council of Ministers said at the Luxembourg summit three years ago that the issuance of such general orientations would only be considered in very exceptional circumstances. Thus, as long as such general orientations have not been issued, the day-to-day management of the foreign exchange market - and that includes whether or not to intervene - is in the hands of the Governing Council of the ECB. I believe I can not be clearer than that. Now, is the liquidity to accommodate possible second-round effects already there? I can only say that the growth of M3 over the past year and a half and the growth in credit to the private sector month after month after month over the past year and a half were both far in excess of what we call our reference value and both point to the fact that liquidity conditions at present can be characterised as still being ample. What they are being used for is a different matter, which we do not decide upon. But they are ample. As for your third question as to whether the sale of our interest income from foreign exchange has something to do with pressure from financial circles or finance ministers to start interventions, I should like to point out that I can not imagine that you can conclude that the fact that these pressures were there is something of the last few days or maybe the last week. The decision to divest these accrued interest receipts was already taken on 31 August...
Question:... yes, but you are forward-looking in your policy...
Duisenberg:... yes, but I can assure you that in preparing decisions we are also forward-looking. So, preparing a decision on 31 August took place a long time before 31 August.
Question: If I could just return briefly to the question of oil prices. What you said was that oil price increases mean a loss of income for the economy as a whole and that it is inappropriate for governments to try to shift that loss from one sector to another. The reason that the protests about this have taken...
Duisenberg: Sorry, I did not say it was inappropriate, but I said that if an economic agent, be it a government, employers or employees, wants to try to shift that burden, this must always be assessed in the light of the fact that for the domestic economy the economic loss will be there, wherever the loss is being borne. And any measures taken by whomsoever, be it governments or other economic agents, must be assessed against the background of long-term structural policy aims which will be there, which are there, oil price increases or not.
Question: Given that the protests are being staged by some groups which are being affected more than other groups in society, fishermen, hauliers and farmers, are you saying that in your revised version, or at least in the clarification of your answer, that you can in fact understand why governments would wish to respond to what appears to be an injustice to these people facing a greater burden and that, in effect, it could be appropriate for governments to take action to shift this burden?
Duisenberg: I have a great understanding for governments. I can always fully understand - but that has nothing to do with my job as a central banker - that governments may be inclined to alleviate the burden for some and make it even heavier for others or to find room in their budgets by cutting expenditure in order to take countermeasures on account of the weakest categories in society. I have full understanding for that but, as I say, it has to be assessed against the background of the fact that the loss to the economy as a whole can not be avoided and one can not get around this fact. The specific measures which whatever pressure group or government or economic agent, in general, is contemplating has to be assessed against the long-term goals of the official policy. It has to be evaluated against the background of the structure of the fiscal system and of deficits. And then you can come to a conclusion as to whether the specific action taken is appropriate or not. That I leave to the principle of subsidiarity, that is to say I leave it up to the national authorities to come to their own conclusions and maybe even to make these public.
Question: Mr. Duisenberg, Prague is next week and the week after that. I would like to ask, what do you think the chances are of a change to the Plaza or Louvre agreements? How high do you think the probability is of that?
Duisenberg: Not high. The question is, how do I see the chances of there being a renewal or modification of the Plaza or Louvre agreements of the past. Well, let me say this, I know what is on the agenda for Prague. I also know what the agenda for the G7 meeting will be and the point you mentioned is not on the agenda.